Instaleaf, a Canadian clothing merchandiser, made a contract with Raston Clothing of Hong

Kong whereby Instaleaf would import jackets from Raston and pay them by letter of credit. The

letter of credit provided that shipments were to be made in installments from Taiwan to Montreal

and that the foreign supplier could recover payment for each installment by making partial draws

against the letter of credit. Each draw was to be made by presenting a draft for the price of each

shipment together with the bill of lading, a commercial invoice, a Canadian customs invoice, an

insurance certificate, and a quality inspection certificate. It also provided that the bill of lading

was transferrable and subject to redirecting the location for delivery by the transferee. The L/C

included the usual undertaking by the issuing bank to honour drafts presented by the negotiating

bank that are accompanied by conforming documents.

The first and second shipments were made and invoiced for $107,000 and $85,000 respectively.

At the time of the first shipment, the bill of lading was transferred to Cramkoft, another Canadian

clothing merchandiser, the confirming bank presented the issuing bank a draft with conforming

documents redirecting delivery to Cramkoft in Vancouver and that draft was honoured. After

payment of the first draft, but before payment of the second draft it was discovered that the first

shipment stated the initial delivery location was Quebec before Cramkoft redirected the delivery

to Vancouver.

In addition, Interpol had issued an alert for banks to watch for forged documents for clothing

shipments coming from Hong Kong with the forgers illegally using Cramkoft's name.

When the second draft was presented, the issuing bank said it was rejected because it was in the

name of Cramkoft not Instaleaf. Instaleaf objected but was sued for breach by Raston, the seller,

before it could resolve the issue. Instaleaf said the issuing bank is responsible for improperly

rejecting the draft. During the suit it was discovered the second draft was forged and the

documents listed Quebec as the initial destination.

The issuing bank asks you to give them an assessment of the case. Will Instaleaf be successful

in defending the suit against it?

How could I answer the question using knowledges for L/C?